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Mr. William Klein is a Consulting partner with FGS Global, a global strategic Communications company. He has also been a member of the US State Department's Senior Foreign Service. Mr. Klein has dedicated the majority of his diplomatic career to leadership roles at the heart of the U.S.- China relationship.
Image Graphics by Team Geostrata
Pratyaksh: Welcome viewers, in today's edition of the Geo interview, we have with us Mr William Klein who's currently a Consulting partner with FGS Global, a global strategic Communications company. Sir has also been a member of the US State Department's Senior Foreign Service.
Mr. William Klein has dedicated the majority of his diplomatic career to leadership roles at the heart of the U.S.- China relationship. Welcome sir, how are you?
Mr. Klein: Well, thank you very much. I'm well and very, very excited to talk to you today.
Pratyaksh: Sir, given your long experience in diplomacy, I would like to ask you, how does it help you in your latest stint in the corporate world. And what sort of role do you see the companies playing in helping and solving the ongoing geopolitical fissures?
Mr. Klein: Well, first of all, the most important job that any diplomat anywhere in the world has, is to understand the country in which she or he works. Our job is then to understand the whole country's perceptions towards our government and towards our country, to understand that country's interests, to understand perceptions of the host country, of the government, and of the society towards our country and also towards the policy that we, as a country pursue.
So, that means that diplomats have to be very, very empathetic. And all of these skills are very, very important in the corporate world as well, particularly nowadays where we are seeing that the role of politics in economics is increasing, and is greater than perhaps any time in the past generation. We are seeing that multiple stakeholders, whether that is government, investors, media, civil society, consumers, clients, suppliers, etc are also scrutinizing corporate behavior more than any of us can remember.
And there, too, then business executives also have to be empathetic, to understand the perspectives of these stakeholders and to manage all of that. So a diplomatic career is extremely useful for the corporate world, particularly in today's corporate world. Where, as I said, you know, governments are prioritizing in many respects their national security or their economic security over the commercial interests of many of their companies.
Pratyaksh: Truly sir, we live in a globalized world. With the world increasingly coming to terms with Chinese aggression and the aims that the Chinese President has himself conveyed time and again, how much do you think China will be able to maintain its economy and increase its hard power? Given that several groupings like QUAD and AUKUS are increasingly propping up?
Mr. Klein: Well, first of all, China is the second largest economy in the world according to pure GDP figures. As it continues to modernize, China is also becoming an important source of innovation in the global economy. The country also needs a stable and predictable economic, regulatory, and also geo-political and geo-economic environment in order to pursue its domestic ambitions. At the same time, China, of course, has its geopolitical ambitions and in many ways, these geopolitical ambitions do not contradict the geopolitical interests and ambitions of other great powers in the world, be that the United States, or for example, India.
At the same time, tensions and distrust and the sources thereof are readily known to all of us. I don't need to reiterate any of that. So managing this strategic distrust among great powers, managing this rivalry among great Powers, will be very, very important for leaders in all of these countries.
Moving forward, the United States and China relationship is indeed characterized by strategic competition and by severe deep strategic distrust. At the same time, neither the United States nor China has an interest in allowing this distrust and this competition to descend into confrontation or conflict. That is something that neither side wishes. And for that reason, we are seeing an effort on both sides to manage this distrust, to contain this competition.
We are seeing a similar movement on behalf of India and China. You know there too, the deep strategic distrust and competition at the heart of the relationship is framing diplomatic engagement between the two countries more and more. I mean we see, we have followed, with tremendous concern, all of the border disputes in recent years. There too, we observe that India and China have an interest in containing the competition, the distrust and these types of disputes.
Even though solving these disputes may be very, very difficult from the contemporary perspective, clearly all sides have an interest in containing this competition and distrust. It is also true for all of the other major players in the world, whether that is the European Union, whether that is the ASEAN countries of Asia and the various types of arrangements that we see are emerging both in the economic and security realm. The countries are very, very acutely aware of the geopolitical headwinds, but have an interest in managing that.
Whether this is going to work or not, and whether we will be successful, really depends on the leadership and the wisdom of officials around the world and how they manage their own domestic constituencies. I for one am optimistic that the world will manage this geopolitical competition.
Pratyaksh: Sir you mentioned that there exists a deep strategic mistrust between the U.S. and China and given your long diplomatic career in dealing with the People's Republic of China what sort of additional policy solutions would you suggest to both parties?
Mr. Klein: I think, first and foremost, it is very, very important that the two sides talk to each other, that the two sides communicate to each other.
Only by, and I know this as a diplomat, only by face-to-face communication, is it possible to truly understand the other side's perspectives.
Also to understand the priorities of the other side's interests and concerns and then over time through this type of communication, understand where the other side may be flexible and where the other side is not flexible at all. So, what is then at all possible? This type of communication doesn't always lead to results, but if you don't have this communication, you cannot have these types of results. So I think that's the most important thing and we have seen that the United States and China have recognized this.
President Biden and the Chinese leader Xi Jinping met, as we all know, on the margins of the G20 in Indonesia late last year. The American government has announced that Secretary of State Anthony Blinken will be visiting China in early February. We know the climate envoys of the two countries and also had a conversation recently. So these types of conversations are incredibly important. Beyond that, what is necessary is that these conversations just don't stay at that level, but rather that they shape, then, how the two sides then engage with each other.
In particular, how the two sides identify those issues that are driving distrust and think about ways to collectively manage it. For example, in the military realm, the United States is a resident Pacific power. It has been since 1945 and the United States is not going anywhere. China's military capabilities are growing and as that takes place, China is projecting its naval and air power deeper into the Pacific, so that the contact between the two navies and the likelihood of encounters is only increasing. And for that reason, it is very, very important that the two militaries have understandings, have lines of communication open, have patterns of behavior and notification, etc, to ensure that encounters and intentions are understood correctly and do not lead to miscalculations or to mistakes that then could evolve into a broader source of confrontation.
So for that reason, the two sides beyond the high-level communication have to establish some sort of, I wouldn't call them confidence-building measures necessarily, but rather conflict mitigation and conflict-avoiding measures to ensure that these sources of distrust don't snowball and get out of hand. Those are just a couple of examples. There are many, many more.
Pratyaksh: I genuinely agree that communication should be part of the US-China relationship. Sir now from geopolitics, I would like to draw your attention to geo-economics. Sir, given that there is so much power polarity in our world right now, how do you see the future of globalization as we go ahead? And I say this because regionalization of trade is increasingly coming up. So as a diplomat, how do you perceive these regional economic groupings?
Mr. Klein: First of all, there's a lot of talk about the future of globalization and
I would agree with the assessment that we are perhaps beyond peak globalization.
I would define peak globalization as economic relationships that are first and foremost driven by comparative advantages, right. Goods, services, and capital ideas flow according to relative price differences between economies; this continues to drive most of the global commerce and investment; and will continue to drive the same in the future.
Having said that, as we mentioned earlier, governments are now prioritizing economic and national security more than the commercial interests of their companies in many ways.
And we are seeing that they are taking measures that are increasing the costs and shifting the comparative advantage.
A great example of this would be the Trump administration's tariffs on Chinese imports and China’s reciprocal actions. Or the measures that the United States has now undertaken to stem the flow of semiconductors and related technologies to China from the United States. I think, in the key technologies that drive innovation and prosperity in the 21st century, you will see governments continuing to take measures like this, prioritizing economic and national security.
You mentioned economic or regional economic groupings, what we are seeing is that the World Trade Organization or efforts to reform it are increasingly difficult for many reasons. First of all, because of the multitude of interests among the members trying to find consensus, and secondly, the domestic political trends in individual countries. For that reason, we have seen the growth of regional types of economic arrangements.
The Trans-Pacific Partnership, I think is the best example that was envisioned as a high-standard agreement, that goes way beyond the requirements of the World Trade Organization, addresses many of its perceived shortcomings and creates a group of like-minded trading partners that adhere to high standards, and that would then shape the trading and investment environment in the Indo-Pacific region in the future.
As we know because of domestic political concerns, the United States walked away from the Trans-Pacific Partnership on Donald Trump's first day in office and even before that, there was not a political majority for ratification of the TPP. And since then, there is still no majority in the United States for this type of trade arrangement. For that reason, we're seeing different types of arrangements.
For example, the Indo-Pacific Economic Framework is the latest attempt to address many of these issues while circumventing the issue of the actually politically sensitive issue of trade liberalization. We see that as you know, RCEP is up and running as well. And I think that moving forward, if we do see trade liberalization, it will be in sub-regional arrangements and or it will be in arrangements that perhaps avoid the thorny issues of pure trade liberalization, per se, and address other barriers to trade, and facilitate other types of economic cooperation.
Pratyaksh: Sir, I am compelled to ask you about the US Inflation Reduction Act, given your in-depth views about globalization that you just highlighted and your experience as a U.S Diplomat. How do you perceive it from the context of the relationship between the US and the EU?
Mr Klein: You know, as I mentioned earlier, governments are prioritizing national and economic security. And in doing so, they are adopting industrial policy measures that just a few years ago, I think most of us would have thought are unthinkable or politically untenable.
But because of geopolitical rivalries and competition in the world, industrial policy is back.
And I think that looking forward, industrial policy is here to stay, at least for as far as our expectational horizons can extend into the future.
And the Inflation Reduction Act is an example of U.S. industrial policy that reflects this view. It pursues many, many goals, but one of them is also to make the United States particularly competitive in some of the technologies that will drive growth, innovation and prosperity in this century. It was done with U.S. interests first and foremost in mind, keeping its domestic political considerations in mind.
We've seen, with the reaction here in Europe, that either the United States did not fully take into account European concerns or it took them into account but then in the cost benefit analysis, deemed it still in the U.S. interest to move forward as has been now specified in the law. I can say that here in Europe, the local content requirements of the IRA are of tremendous concern and no shortage of European leaders have articulated both publicly and also in direct conversations with U.S. government officials their concerns about this law there.
The Biden administration has acknowledged these concerns, and has said that it wants to accommodate European concerns. How exactly the Biden administration plans to do that I wouldn't dare predict, I think we will have to wait and see.
The second big question about the IRA is what, if anything, are the Europeans going to do in response.
We've already seen that this week the European Union announced a package of measures, but it’s very clear, the European Union and the United States, all of their differences over the IRA notwithstanding, do not have an interest in allowing these differences then to devolve into an industrial policy conflict and subsidy war between each other. I think that is very, very clear on both sides.
So at the moment, you're seeing a lot of damage control, if I can call it that, and I think sincere efforts on both sides to find an accommodation. But like I said, you know what that accommodation might look like, you know, whether it's even possible, whether it will truly satisfy European concerns while at the same time satisfying the interests of American stakeholders remains to be seen.
Pratyaksh: Coming from the western part of the world, I would now like to shift your focus on the Indo-Pacific. Given that China is hell bent on building its infrastructure along its borders with India, how much do you think China will be comfortable living beside an India that is economically growing fast and whose geopolitical clout is increasing by the day.
Mr. Klein: Well, I think that China understands that India's influence is increasing and that India's comprehensive national power also will only increase in the coming years and decades, and that China has to go and live with a more powerful and assertive India, just like India has to live with a powerful and assertive China, that is normal among great powers. The question is how these two sides can manage this relationship. Again, we talked a little bit earlier about the distrust and the competition driving this relationship.
I think it's safe to say that it is not going away. However, both sides have an interest in containing that, and I am confident that you will see continued effort on both sides.
Typically, China, looking at India, will indeed attempt to contain these differences and to prevent them from descending into conflict. At the same time, we can expect that China will continue to very assertively advance its interests on issues such as border disputes.
These are very, very difficult issues to address and solve. And that, too, I think, will be an issue that will continue to attract all of our attention in the Indo-Pacific moving forward. But I am very confident that the leadership on both sides will continue to prioritize finding accommodations so that this competition doesn't worsen to a level of conflict.
Pratyaksh: We've talked about geopolitics and we've also talked about geoeconomics. If there is one thing that sits at the confluence of both these theaters, it is technology. Sir, how much do you think that the United States will be able to limit its technological dominance and know-how from being appropriated by China?
Mr Klein: The United States has already been explicit; the Biden administration, that it not only has a defensive posture with respect to certain types of high technology, let's just take semiconductors as an example.
It also wants to maintain absolute competitive advantage in these cutting edge semiconductors over China. How successful will the United States be? I think that remains to be seen.
I do think, however, that because of the strategic advantages that the United States has already developed in some of these high-tech industries, give it a strong position in order to maintain this competitive advantage over China.
What we are seeing in the semiconductor area, I think, is the most notable example of decoupling, if we want to call it that. And I think that this type of decoupling is absolutely here to stay in the semiconductor realm, for higher value added semiconductors in particular and not in the generics.
I think you're going to see this in other areas as well, whether it is quantum computing, artificial intelligence, whether it is biotechnology, just to name several examples and there too, you're going to see both sides trying to create strategic advantage and prevent the other side from gaining, from catching up, as it were. How effective will this be? How will third countries position themselves in this? It remains to be seen.
I think the idea that you can build high fences around these types of technologies will be absolutely possible to a certain extent. But these high fences will be porous for any number of reasons, so you will continue to see a certain amount of intellectual and technological dissemination.
But it will be far more costly, and it will be far slower between and between the blocks, but that's in the high-tech areas. I think that most global commerce is completely banal, I would say, if I can characterize it that way, from a national security point of view, and factors like division of labor, comparative advantage will continue to shape trade and economic flows.
Pratyaksh: Thank you so much, sir. This is going to be one of my last questions. A lot of developments have been happening in the Indo-Pacific, be it Japan's increasing or doubling its defense expenditure, or Europe's long pivot to Indo-Pacific in terms of strategic partnerships, whether it be India or other South Asian countries. Do you think containment is a possibility that China fears, or it thinks that it is too hard for the West or for the world to do so now?
Mr Klein: Well, I know from experience working at the heart of the US-China relationship that the Chinese leadership and frankly, many people in China, if not a majority do believe that the United States has the strategic intention to contain China, if not to contain China, then at least to disrupt its modernization aspirations.
I know for a fact that those are not the US intentions, but because of the distrust that exists between the two sides, it's not easy to persuade Chinese partners and interlocutors from that.
So I think China views US intentions through that perspective. It also views US strategic, military, diplomatic and economic intentions in the Indo-Pacific region through that prism as well. What China is trying to do, as we have seen, is to ensure that it maintains freedom of movement, and freedom of agency across the Indo-Pacific space.
In particular, it wants to ensure that other countries do not make common cause with the United States. It fully recognizes that many countries in the region have deep shared interests with the United States. At the same time, it wants to ensure that those deep shared interests do not evolve into a common anti-Chinese bloc, as it were.
This type of rivalry will continue to shape diplomacy and geopolitical trends in the Indo-Pacific moving forward. I think that because the United States’ intention is not to contain China, I am confident that this type of geopolitical positioning and rivalry, ultimately, despite whatever tensions and headlines that may create on individual cases, will not fundamentally undermine stability and prosperity in the region.
Pratyaksh: As a U.S. diplomat working at the highest levels, what has been your experience and what sort of advice would you have for the young people who are interested in domains like geopolitics and foreign policy?
Mr Klein: Well first of all, diplomatic life and career is an amazing privilege, it's a tremendous opportunity. I highly urge young people interested in global politics to take a good, hard look at diplomacy and the opportunities to represent their country. Beyond that, we are seeing that geopolitics is shaping so much more of our lives today as the world becomes more interconnected, as globalization marches forward, that the role of geopolitics in economic, political and social life in our countries is only going to grow.
So the need to understand geopolitics is very important, regardless of what type of career path one pursues, whether it's in business, whether it's in technology, academia, in government, etc. And for that reason, it's time very well spent, to just invest in understanding the fundamentals of geopolitics today, and in particular, how geopolitics shapes the environment for whatever, for whatever field you are interested in.
Pratyaksh: Before we started the interview you mentioned working in India. What was your experience like in our country?
Mr Klein: Very, very positive. And, you know, our job as diplomats is to engage people from the host country and the whole society and that was very easy in India. People across Indian society were very gracious with their time, they were very hospitable. I can't remember how many invitations I received from Indians across all groups of society, personal invitations to come to their homes and to get to meet their families to have meals with them. And so that was my most memorable and cherished experience, and obviously really, really won over my heart in India. So it was a tremendous experience personally, also professionally. You know, while working in India, I realized again that the United States and India are actually natural partners.
I think we in the United States sometimes get a little bit overexcited about, you know, just how much Indian and U.S. interests overlap. I learned in India that it has its own strong perspective on many things, including, you know, how India looks at the United States and its interests. But still, it was very, very satisfactory to have very in-depth, productive, constructive and respectful conversations with members of the Indian government, political parties, civil societies, media, academia about U.S. Indian relations, and how the two sides can deepen them. And if I look back, I think we've been very successful, in that comprehensive ties between the United States and India have only gotten stronger in recent years.
Pratyaksh: Well, Mr. Klein, it was an amazing discussion on US-China, US-India and the Indo-Pacific. We sincerely thank you for joining us and we hope to host you someday soon.
Mr Klein: Well, thank you very much for the invitation. I look forward to continuing our conversation in the future. Thank you so much.
Watch the entire interview on the Geostrata's YouTube page
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BY PRATYAKSH KUMAR
IN CONVERSATION WITH MR. WILLIAM KLEIN, FORMER AMBASSADOR, US SENIOR FOREIGN SERVICE.
TEAM GEOSTRATA
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